On Tuesday 21 February, the French finance minister, Michel Sapin, proposed a draft compromise aiming to keep Belgium and Slovakia at the negotiating table on a financial transactions tax (FTT).
These two countries are calling for an exemption from the future tax for pension funds. The other eight countries take the view that these exemptions would be detrimental to the tax, as the Spanish minister, Luis De Guindos, explained upon his arrival at Tuesday's Ecofin meeting.
According to several sources, the French proposal is a kind of compensation for pensions affected by the future tax. The idea was not discussed in detail and so, it is hard to say whether it will be a kind of tax deduction, tax credit or an allocation. It was this idea that was of the greatest interest to the ministers on Tuesday morning. The idea of a derogation for countries calling for one was also raised, but was not discussed for as long. The idea of compensation, however, would appear hard to implement.
After the meeting, the Belgian finance minister, Johan Van Overtveldt, reiterated that he was bound by a Belgian governmental agreement to protect pension funds.
As regards the other request of the Belgians and Slovaks, to protect the real economy (see EUROPE 11728), the ministers are reported to be close to an agreement. Readers may recall that Belgium and Slovenia expressed concerns that the anti-abuse clause of the directive would erroneously cover companies that should not be taxed. This clause basically states that any business, institution, entity or person carrying out financial transactions the annual value of which represents more than 50% of its net turnover would be covered by the tax. The draft compromise provides for intra-group transactions not to be included in the scope of application of the tax.
During the meeting, the Belgian minister also stressed the need not to lose sight of the volatile international context, with the prospect of Brexit and the possibility of financial deregulation in the United States. We must not step backwards over our emblematic plans to tax the financial sector because certain parties wish to water down the EU or to deregulate, explained Pierre Moscovici, the Commissioner for Taxation, after the meeting. (Original version in French by Élodie Lamer)